# 6.5 Elasticity of supply

The **price elasticity of supply** is the percentage change in quantity supplied divided by the percentage change in price.

**Price Elasticity of supply = % change in Quantity supplied ÷ % change in Price**

In Fig 6.9, when the price of a cup of coffee is $4.5, the quantity supplied is 4 cups an hour as shown by point A and when the price rises to $6.00 a cup, the quantity supplied rises to 10 cups every hour as indicated by point B.

**Price Elasticity of supply between points A and B (using the midpoint formula) = {(10 – 4) ÷ ((10 + 4) ÷ 2) × 100} ÷ {(6 – 4) ÷ ((6 + 4) ÷ 2) × 100} = 85.7 ÷ 40 = 2.14**

Price elasticity of supply is always positive because price and quantity, both change in the same direction, following the law of supply.

## Attribution

“4.1 Calculating Elasticity” in Principles of Microeconomics by Dr. Emma Hutchinson, University of Victoria is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.